NEW ISSUE RATINGS: Standard & Poor’s: AA BOOK- ENTRY ONLY Moody’s: Aa1 In the opinion of Bond Counsel, under existing law and assuming compliance with covenants of the State in the Bond documents, interest on the Bonds is excludable from grossn i comef o owners of the Bonds for federal income tax purposes. Interest on the Bonds will not constitute a preference item for the purpose of computing the alternative minimum tax imposed on certain individuals and corporations. Interest on the Bonds will be included in the computation of adjusted current earnings for the purpose of the alternative minimum tax imposed on some corporations. In Bond Counsel’s further opinion, interest on the Bonds is exempt from all taxes of the State of Arkansas including income, inheritance, and property taxes. See TAX EXEMPTION herein. $197,005,000 STATEF O ARKANSAS FEDERAL HIGHWAY GRANT ANTICIPATION AND TAX REVENUE BONDS (GENERAL OBLIGATION), SERIES 2012 Dated: ,October 1 2012 Due: As shown below The State of Arkansas Federal Highway Grant Anticipation and Tax Revenue Bonds (General Obligation), Series 2012 (the "Bonds") will be issued pursuant to a book-entry only system and will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC" ), New York, New York. There will be no distribution of the Bonds to ultimate purchasers ("Beneficial Owners"). (See THE BONDS, Book-Entry Only System, herein.) The Bonds are issuable as registered bonds without coupons in the denominations of $5,000 each or any integral multiple thereof. Principal is payable semiannuallyn o April 1 and October 1,s a shown below, and interest is payable semiannuallyn o April 1 and October 1, commencing April 1, 2013. Interest will be payable by check, draft or wire transfer of the Paying Agent sent to the Registered Owner as of the Record Date. Principals i payable at the corporate trust office of U.S. Bank National Association, St. Paul, Minnesota, Paying Agent and Bond Registrar. So long as DTC or its nominee is the owner of the Bonds, disbursement of payment of principal and interest to DTC is the responsibility of the Paying Agent, disbursement of such payments to DTC Participants (as defined herein) is the responsibilityf o DTC, and the responsibility of disbursements of such payments to Beneficial Owners is the responsibility of DTC Participants, as more fully described herein. The Bonds will constitute general obligations of the State of Arkansas and are secured by an irrevocable pledge of the full faith, credit, and resources of the State. The Bonds are being issuedo t finance improvements to interstate highways in the Statef o Arkansas. Issuance of the Bonds has been authorized by the Arkansas State Highway Commission (the "Commission"), opursuant t Title 27, Chapter 64, Subchapter 4 of the Arkansas Code of 1987 Annotated and a statewide election held November 8, 2011. The Bonds are subject to optional and mandatory sinking fund redemption prior to maturitys a more fully described herein. MATURITY SCHEDULE Maturity Principal Interest Maturity Principal Interest Date Amount Rate%) ( Yield (%) Date Amount Rate (%) Yield%) ( April 1, 2015 $ 7,600,000 5.000 0.350 ,April 1 2020 $ 9,970,000 5.000 1.410 ,October 1 2015 7,985,000 5.000 0.370 October, 1 2020 10,220,000 5.000 1.470 ,April 1 2016 8,180,000 5.000 0.460 April, 1 2021 10,475,000 5.000 1,630 ,October 1 2016 8,385,000 5.000 0.460 October, 1 2021 10,735,000 5.000 1.690 ,April 1 2017 8,595,000 5.000 0.700 April, 1 2022 11,005,000 3.000 1.840 ,October 1 2017 8,810,000 5.000 0.700 October, 1 2022 11,170,000 3.000 1.870 ,April 1 2018 9,030,000 5.000 0.920 April, 1 2023 11,335,000 3.000 1.980* October, 1 2018 9,255,000 5.000 0.950 October, 1 2023 11,505,000 3.000 2.080* ,April 1 2019 9,490,000 5.000 1.190 April, 1 2024 11,680,000 3.000 2.300* October, 1 2019 9,725,000 5.000 1.250 October, 1 2024 11,855,000 3.000 2.380* (Plus Accrued Interest from October 1, 2012) The Bonds are be offered when,s a and if issued and received by the Underwriter. The Bonds are subject to approval of legality by Friday, Eldredge & Clark, LLP, Little Rock, Arkansas, Bond Counsel for the Commission, and to certain other conditions referredo t herein and in the Official Notice of Sale, dated August 24, 2012.t I is expected that the Bonds will be available for deliveryn i Little Rock, Arkansas, or New York, New York (through the facilities of DTC),n o or about October 2, 2012. Official Statement dated September 12, 2012. *Priced to first optional call date, October 1, 2022. STATE OF ARKANSAS EXECUTIVE OFFICERS MIKE BEEBE Governor .MARK A DARR MARKA M RTIN Lieutenant Governor Secretaryf o State MARTHA SHOFFNER CHARLIE DANIELS Treasurerf o State Auditorf o State DUSTINC M DANIEL JOHN THURSTON Attorney General Commissioner of State Lands ____________________ ARKANSAS STATE HIGHWAY COMMISSION R. MADISON MURPHY JOHN BURKHALTER Chairman DICK TRAMMEL DJOHN E REGENOLD Vice Chairman THOM.AS B SCHUECK ____________________ .SCOTT E BENNETT Directorf o Highways and Transportation OFRANK V ZEL RITA S. LOONEY LARRY DICKERSON Deputy Director and Chief Legal Counsel Chief Fiscal Officer Chief Engineer BOND COUNSEL FRIDAY, ELDREDGE & CLARK, LLP 400 West Capitol Avenue, Suite 2000 Little Rock, Arkansas 72201 ____________________ FINANCIAL ADVISOR STEPHENS INC. 111 Center Street, Suite 2300 Little Rock, Arkansas 72201 i No dealer, broker, salesman, or other person has been authorized by the State of Arkansas, the Arkansas State Highway Commission, the Financial Advisor or the Underwriter to give any information or to make any representations with respect to the Bonds other than those contained in this Official Statement, and if given or made, such other information or representations must note b relied upon as having been authorized by any of the foregoing . This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the State of Arkansas or the Arkansas State Highway Commission since the date hereof. IN CONNECTION WITH THE OFFERINGF O THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. [Remainder of page intentionally left blank.] ii TABLE OF CONTENTS Page SUMMARY OF CERTAIN INFORMATION vi INTRODUCTORY STATEMENT 1 Authority for the Bonds 1 Bonds Previously Issued 1 Additional General Obligation Bonds of the State 1 fUse o Proceeds 2 Annual Debt Service Requirements 2 fSources o Information 2 THE BONDS 3 Description of the Bonds 3 Redemption 4 Book-Entr y Only System 4 Security and Sources of Payment for the Bonds 6 THE COMMISSION AND THE DEPARTMENT 6 ORGANIZATION AND GOVERNMENT OF THE STATE OF ARKANSAS 6 Legislative Branch 7 Executive Branch 7 Judicial Branch 8 GENERAL INFORMATION CONCERNING THE STATE OF ARKANSAS 8 Location, Size and Population 8 Major Cities 8 Transportation 8 Education 9 Medical and Health Care Facilities 10 Recreation and Culture 10 ECONOMIC INFORMATION CONCERNING THE STATE OF ARKANSAS 10 Gross Domestic Product 11 Retail Sales 11 Property Values 11 Employment Distribution 12 Unemployment and Employment Trends 12 nTrends i Personal Income 13 Manufacturing 13 Fortune 500 Firms 14 Agriculture 14 INDEBTEDNESS OF THE STATE OF ARKANSAS 14 General and Revenue Obligations 14 Special Obligation Bonds 17 Guaranteed Indebtedness 17 Lease Obligations 18 iii FINANCIAL INFORMATION CONCERNING THE STATE OF ARKANSAS 18 Financial Organizations and Management 18 Budget and Appropriation Process 18 Revenue Stabilization Law 18 Auditing Procedures 19 fSummary o Certain Recent Financial Operations 20 Ret irement Systems for State Employees 21 Other Post Employment Benefits 27 CERTAIN TAXPAYER INITIATIVES AND LEGISLATION 27 CERTAIN LEGISLATION AFFECTING STATE GENERAL REVENUE COLLECTIONS 28 FEDERAL- AID HIGHWAY PROGRAM 29 Federal Highway Trust Fund 29 History 30 Operations 31 DESIGNATED REVENUES 36 STATE HIGHWAY REVENUES; GENERALLY 37 SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION 38 Definitions 38 General Resolution to Constitute Contract 41 Application of Bond Proceeds 41 Exchanges and Transfers 41 The Pledge Effected by the General Resolution 42 Funds 42 fDeposit o General Revenues 42 Investment of Funds 43 fEvents o Default 43 Remedies 43 Limitations on Suits 44 yControl b Bondholders 44 Trustee and Paying Agent 44 Additional Paying Agents 45 Resignation of Trustee 45 fRemoval o Trustee 45 Trustee Which Has Resigned or Been Removed Ceases to be Paying Agent 45 Appointment of Successor Trustee 45 Resignation or Removal of Paying Agent and Appointment of Successor 46 Suppl emental Resolutions - Effective Without Consent of Beneficial Owners of Bonds 46 Supplemental Resolutions - Effective With Consent of Beneficial Owners of Bonds 46 Termination of Rights 47 RATINGS 47 TAX EXEMPTION 47 LITIGATION 48 FINANCIAL ADVISOR 48 CONTINUING DISCLOSURE 49 iv UNDERWRITING 49 ADDITIONAL INFORMATION 49 APPENDIX A: Formf o Bond Counsel’s Approving Opinion A-1 APPENDIX B: Arkansas Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2011 B-1 APPENDIX C: Cont inuing Disclosure Agreement C-1 v SUMMARY OF CERTAIN INFORMATION The following material represents a summary of information contained within this Official Statement and is qualified in its entirety by the related detailed information herein.